Dream Global bought by Blackstone in $4.7bn deal

December 2019 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

December 2019 Issue

Funds managed by US-private equity firm Blackstone have agreed to acquire Dream Global Real Estate Investment Trust in an all-cash deal valued at $6.2bn, including debt.

The deal will see Blackstone pay C$16.79 a share for Dream Global. The offer is 19 percent higher than the company’s closing price on the last day of trading before the deal was announced. The transaction is expected to close in December, pending shareholder approval and customary closing conditions. The deal needs at least 66.67 percent approval from Dream’s shareholders. Its board of trustees unanimously approved the offer and recommended the company’s shareholders vote in favour of it.

“This transaction is the culmination of the tremendous growth that Dream Global has achieved since its 2011 IPO,” said Detlef Bierbaum, chairman of Dream Global’s board of trustees. “At a time when the Western European real estate market is becoming increasingly competitive, this transaction provides premium value to unitholders. Upon completion of the transaction, Dream Global will have increased its equity market capitalisation by nearly eight times and will have delivered total annualised returns of 15 percent to our unitholders, since inception, which exceed both the Canadian and European REIT benchmarks by approximately 60 percent and are competitive against the best managed real estate private equity funds and pension funds globally, over the same time period.”

“Today’s announcement can be attributed to Dream Global’s high-quality portfolio of properties located in key markets in Western Europe and the strength of our property management platform, as evidenced by our strong relationships with tenants, partners and lenders,” said Jane Gavan, president and chief executive of Dream Global. “By combining a disciplined approach to capital allocation with active asset management, we have established Dream as one of the most respected brands for investing in Western European office properties.”

“We are delighted to be acquiring Dream Global, a high-quality and diversified portfolio of office and logistics assets in Western Europe, which has been created by Dream over the last eight years,” said James Seppala, head of Blackstone Real Estate Europe. “This Transaction is an exciting opportunity for Blackstone to expand its existing office and logistics portfolios in some of the largest and most important markets in the region.”

Canadian real estate investment trust (REIT) Dream Global, which was formerly known as Dundee International REIT, started out by acquiring properties leased to Deutsche Post, Germany’s post office. Today the firm owns over 200 office and industrial properties in key markets in Western Europe with a particular focus on Germany and the Netherlands. The Dream Global assets will also add a substantial number of office properties to Blackstone’s portfolio.

Warehouses and other logistical assets are becoming increasingly attractive investment propositions, amid an increased push from retailers and ecommerce juggernaut Amazon. In June, Blackstone paid $18.7bn for Singapore-based GLP’s portfolio of US warehouses, one of the company’s biggest-ever deals. In late September, the firm also agreed a deal to acquire a number of US industrial warehouses from real estate and investment management firm Colony Capital Inc, for $5.9bn. The Colony Capital deal consists of 60 million square feet across 465 warehouses in 26 US markets. In its latest fundraising round, Blackstone raised around $36bn for its real estate fund.

Logistics REIT Prologis has also engaged in dealmaking of late, investing £4bn in warehousing assets. Colony Capital also recently announced its portfolio expansion through a £1.2bn investment.

Blackstone’s businesses, with $545bn in assets under management (AUM), include investment vehicles focused on private equity, real estate, public debt and equity, non-investment-grade credit, real assets and secondary funds, all on a global basis.

Richard Summerfield